2021 (12) TMI 1037 - AAR - GST

Classification of goods - SAC and rate of GST - Turmeric (Turmeric in Whole form - not in powder form) - Agriculture Produce or not - services rendered by Applicant as a Commission Agent in APMC, Sangli are liable to GST in terms of SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 or not - requirement of registration under the CGST Act, 2017 for his activities specified under Annexure-I - relevant section for registration - HELD THAT - Chapter 9 covers Coffee, Tea, Mate and Spices, Further, it is observed that Turmeric is covered under Chapter Heading 0910 of the GST Tariff. Tariff Item 0910 covers Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices. Under Chapter 0910 Ginger (other than fresh ginger), saffron, turmeric (curcuma) (other than fresh turmeric), thyme, bay leaves, curry and other spices are chargeable to GST @ 5%. Thus it is clear that Turmeric is considered as a Spice - it is found that Fresh Turmeric other than in processed form falling under HSN 0910 30 10 attracts NIL Rate of GST and Dried Turmeric (subject Goods) is covered under HSN Code 0910 30 20 taxable at the rate of 5% GST. Thus, it is seen that the subject produce is a Spice and is not covered under the definition of an agricultural produce - the impugned services supplied by the applicant are not covered under clause (g) of Sr. No. 54 of Notification No. 12/2017-Central Tax (Rates) dated 27 th June, 2017. The impugned services supplied by the applicant are not exempt in terms of Sl. No. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. In other words the said SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017/SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 is not applicable in the applicant's case and therefore the applicant is required o pay GST on the commission amounts received by him - Since the services supplied by the applicant are not exempt in the instant case, the corollary to it is that, the impugned services are taxable and accordingly, the applicant has to get registered under the provisions of the GST Laws.

Summary

Issues Involved:
1. Classification of Turmeric as 'Agricultural Produce' and its GST exemption status.
2. GST applicability on services rendered by the applicant as a Commission Agent in APMC, Sangli.
3. Requirement for the applicant to be registered under the CGST Act, 2017.

Detailed Analysis:

1. Classification of Turmeric as 'Agricultural Produce' and its GST Exemption Status:
- The applicant contended that the processes involved in preparing turmeric (cleaning, boiling, drying, and polishing) are minimal and do not alter its essential characteristics, thus classifying it as 'Agricultural Produce' exempt from GST.
- The Authority observed that the processes of drying and polishing turmeric add to its marketability and value, making it suitable for direct consumer sale. These processes are specialized and not merely minimal.
- It was concluded that such processed turmeric does not fall under the definition of 'agricultural produce' as per Notification No. 11/2017-C.T. (Rate) and 12/2017-C.T. (Rate).
- Turmeric is classified under Chapter Heading 0910 of the GST Tariff, with dried turmeric taxable at 5% GST (HSN Code 0910 30 20).

2. GST Applicability on Services Rendered by the Applicant as a Commission Agent in APMC, Sangli:
- The applicant argued that his services as a commission agent for the sale of turmeric should be exempt under SI. No. 54 Heading 9986 of Notification No. 12/2017 CT(R) dated 28.06.2017, which exempts support services to agriculture.
- The Authority found that since dried and polished turmeric is not classified as 'agricultural produce,' the services provided by the applicant do not qualify for exemption under the cited notification.
- Consequently, the services rendered by the applicant as a commission agent are taxable under GST.

3. Requirement for the Applicant to be Registered under the CGST Act, 2017:
- The applicant asserted that as per Section 23 of the CGST Act, persons exclusively supplying goods/services that are wholly exempt from tax are not required to obtain GST registration.
- The Authority determined that because the services provided by the applicant are not exempt, they are taxable.
- Therefore, the applicant is required to register under the relevant provisions of the CGST Act, 2017.

Conclusion:
1. Turmeric as 'Agricultural Produce': Dried and polished turmeric is not considered 'agricultural produce' and is not exempt from GST. It falls under HSN Code 0910 30 20 with a GST rate of 5%.
2. Commission Agent Services: The services rendered by the applicant as a commission agent are taxable under GST and not exempt under SI. No. 54 Heading 9986 of Notification No. 12/2017 CT(R) dated 28.06.2017.
3. Registration Requirement: The applicant is required to be registered under the CGST Act, 2017 for his activities.